Valuation of AT-1 Bonds by mutual funds to be based on yield-to-call: Sebi
This came after the National Financial Reporting Authority (NFRA) recommended that AT-1 bonds should be valued based on yield to call to align with market practices and Ind AS 113 principles.
Capital markets regulator Sebi on Monday said that mutual funds will value Additional Tier 1 or AT-1 bonds based on yield to call (YTC) basis.
Yield to call is the expected return an investor gets if they buy a bond and hold it until the issuer repurchases it on the call date, before maturity.
This came after the National Financial Reporting Authority (NFRA) recommended that AT-1 bonds should be valued based on yield to call to align with market practices and Ind AS 113 principles.
This recommendation applies only to the valuation of AT-1 bonds under Ind AS 113, not to other purposes.
"In order to align the valuation methodology with the recommendation of NFRA, it has been decided that the valuation of AT-1 bonds by mutual funds shall be based on Yield to Call," Sebi said in a circular.
However, for all other purposes, the deemed maturity of perpetual bonds will still follow the guidelines in the Master Circular. AT1 bonds are issued by banks with no maturity date, but they include a call.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
Top 7 SBI Mutual Funds With Up To 37% Annualised SIP Returns in 5 Years: No. 1 fund has converted Rs 21,000 monthly SIP into Rs 33.14 lakh
Power of Compounding: How much do you need to invest in monthly SIP to accumulate Rs 8 crore retirement corpus if started investing at 25? Check calculations
Understanding the Rule of 72: How a 12% return can double your Rs 5 lakh monthly SIP to Rs 10 lakh in 6 years
08:35 AM IST